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Appeal judges back LSC in battle over payments on account

30 November 2011

The Court of Appeal has rejected arguments by the Law Society and Bar Council that the LSC’s ability to recoup legal aid payments on account should be limited to six years from the end of the case.

Delivering the leading judgment in LSC v Henthorn [2011] EWCA Civ 1415, the Master of the Rolls, Lord Neuberger, said the LSC claimed recovery of an alleged overpayment of money paid to counsel on account of fees.

The court heard that the LSC originally claimed £351,400 from Aisha Henthorn, a retired barrister, later reducing it to £109,000 and finally to £80,500, representing overpayments on eleven cases.

The High Court agreed with Henthorn and the Law Society that time runs, under Section 9 of the 1980 Limitation Act, from the date that work under the legal aid certificate is completed (see solicitorsjournal.com 13 June 2011).

Lord Neuberger said that, under Regulation 100(8) of the Civil Legal Aid (General) Regulations 1989, where payments made by the taxpayer exceeded the final costs of the case, the lawyers must “on demand” repay the balance due to the fund.

He said there was a “perfectly simple interpretation” of the regulation, which paid proper regard to the words, but did not have the disadvantage of giving the Commission “complete control” over when time starting running.

“Time starts running once the assessment is complete in the sense that the Commission has a claim to any balance in its favour from that point, but, in order to be entitled to recover that balance, the Commission must first demand it from the solicitor or counsel concerned,” Lord Neuberger said.

“That analysis appears to be consistent with commercial common sense and with the natural implication that the expression ‘on demand’ imposes an extra duty, not an extra benefit, on the Commission when the balance in its favour, as opposed to when the balance is against it.”

Lord Neuberger said he agreed that the position of barristers, was not satisfactory under the regime, in that if counsel was owed money, it could press ahead with the assessment and any delay would be attributable to the solicitor.

However, he said that he could see no reason why counsel who wished an assessment to proceed should not be able to apply to the court, in the same way as the LSC could, to enforce the solicitor’s duty to proceed with the assessment.

Lord Neuberger said the “melancholy truth” was that Henthorn “may, through her clerks, have been the author of her own misfortune in having overcharged or failed to provide fee notes when asked, in having provided plainly unreliable fee notes, or in not challenging assessments”.

Lord Neuberger allowed the Commission’s appeal. Lord Justice Lewison and Sir Stephen Sedley agreed.

A spokesman for the LSC said it was pleased the ruling had clarified the limitation period for recovering unrecouped payments on account and recognising providers’ responsibilities for assessment of costs.

“The issue of claims where there has been no assessment remains outstanding, but we urge all providers to ensure final claims for costs are made promptly and in accordance with our contract.”

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